Title Insurance Company

[Dmitriy@AUTOcouture]

I've been thinking about starting a Title Insurance company as I currently deal with titles and see some potential for the future.

Does anyone here own one or know anyone that does? Is it profitable? Is there a school or education course out there that teaches everything there is to know about Title Insurance? For example reading title, assessing risk, closing, etc?

I did some research online and realize that I would have to get licensed and registered in certain states but New York is not one of them and that is where I reside and plan to do a majority of my business. Are there any schools in New York where I can delve into this?

Thanks for your help guys.

[JB135i]

Originally Posted by shpuntik

I've been thinking about starting a Title Insurance company as I currently deal with titles and see some potential for the future.

Does anyone here own one or know anyone that does? Is it profitable? Is there a school or education course out there that teaches everything there is to know about Title Insurance? For example reading title, assessing risk, closing, etc?

I did some research online and realize that I would have to get licensed and registered in certain states but New York is not one of them and that is where I reside and plan to do a majority of my business. Are there any schools in New York where I can delve into this?

Thanks for your help guys.

1. Don't mistake my comments as discouragement!

The real estate title insurance industry as a whole is in the tank right now. Many underwriters have folded/merged for a variety of reasons, including but not limited to excess claims and issues regarding the real estate market colapse, poor underwriting practices and controlled business arrangements and agents that were...shall we say...iffy businesses.

Judging only from the way you phrased your questions above I sense you have somewhat limited experience in the business (I could be way wrong, my bad if I am). If you have relatively little experience in the business you will need someone on your staff or a partner with more experience. None of the underwriters (Fidelity, Stewart, First American) will even spit at a new guy wanting in because of all the hits they have taken due to crappy agents racking up massive claims. Most the big underwriters are actually cancelling "under-performing" agents as a way to shed this risk.

The smaller underwriters may still look at you, with enough backing (your own capital) and the correct make up of your personel (owners/staff).

The business CAN be very profitable, IF you run it well and your staff doesn't screw you over by taking short cuts. You are very vulnerable to shenanigans of both your staff and customers. I will not go into details here, because I don't want to give anyone tips on how to pull some of this stuff off, but believe me, I have seen first hand what can happen at a poorly run real estate title insurance company. Actually, doing what I do, I have heard off and seen first hand many issues at many companies.

I have been in the business going on 19 years and have done just about every function in a title company. From title research, examining, policies, closings, audits etc.

My guess is that New York will have massive regulatioins regarding the title insurance industry. You may not need a "personal" license, but the business itself will, I am pretty certain of that. The government rarely misses a chance to regulate a business like this.

Check with your banking regs, financial institution regs, real estate regs, and of course insurance regs, I would be willing to bet that some office in New York covers real estate title insurance.

Again not to be a wet blanket, but if you need classes to be comfortable to be in that business you are NOT ready to be in that business. I still learn stuff weekly, even after 19 years. No disrespect meant, but it's a very tough business with enourmous room for error and newbs will get crushed from within and without.

Work your way around a few different operations (companies), get to know some big-shots in your area, then venture out would be my advice. Do every job you can, because so much can go so wrong. As an owner you will want to know all the weak points.

Good luck man, I love to see this attitude!

[Dmitriy@AUTOcouture]

Thanks a million JB135

You are absolutely right, my experience with title is rather limited - I am a mortgage loan officer at a major financial institution in NYC and currently have my attorneys review the title work before a closing. I definitely want to learn more about the business itself and am willing to go to school for it, but judging from your post, I am guessing that no such school exists and it is something that you learn hands on. Please correct me if I'm wrong.

I will heed your advice but have a couple of questions:

• It is my understanding that before I can even think about opening up a company, I have to set a contract with a underwriter (such as First American, Fidelity, Chicago, etc.). Is this correct?
  
• Do I have to have an attorney on my staff?
  
• What would you say the initial investment would have to be?

Thanks again man, I truly appreciate your time.

[JB135i]

Originally Posted by shpuntik

Thanks a million JB135

You are absolutely right, my experience with title is rather limited - I am a mortgage loan officer at a major financial institution in NYC and currently have my attorneys review the title work before a closing. I definitely want to learn more about the business itself and am willing to go to school for it, but judging from your post, I am guessing that no such school exists and it is something that you learn hands on. Please correct me if I'm wrong.

I will heed your advice but have a couple of questions:

• It is my understanding that before I can even think about opening up a company, I have to set a contract with a underwriter (such as First American, Fidelity, Chicago, etc.). Is this correct?
  
• Do I have to have an attorney on my staff?
  
• What would you say the initial investment would have to be?

Thanks again man, I truly appreciate your time.

Yes you will need an underwriter. It's unlikely you would have to resources to be an underwriter yourself, both cash and logistically (staff). I am not saying it's impossible, just very hard. And if possible, as an agent, you are best off getting more than one underwriter. This accomplishes a couple things. One, you may get referrals from your underwriter and it's a backup in case you get cancelled by one, and further some may have better rates for different products. For example, one may be high on non-comforming or commercial stuff but be good for residential refi's and the other(s) may be just the opposite.

In general these are national companies and each has their own set of guidelines and rules, they are similar, but not the same. There are some regional types too, I would have no idea what exists in the northeast by you. In general they will look at your capital, staff, do back ground checks, credit reports and after all that is done they will examine your colon along with the colons of your entire family if you get my meaning.

Having an attorney may be a requirment in your state, by me it's not. BUT with that being said, an EXPERIENCED real estate attorney would make a great partner.

Initial investment, no idea. I hate to say that, but the variables are just enormous. Beyond what the State and underwriters will require you will need all the normal business junk. Supplies, computers, escrow/title software (not cheap), marketing and money to live on while you starve for a couple months (hopefully only a couple) while the business gets going.

Back to the school issue for a sec. Underwriters and maybe the Bar Association(s) may have seminars that would be helpful, it would be worth check with them. Though the Bar Assn's may only allow members to attend. Also check with the American Land Title Association (ALTA) and likely the New York Land Title Association.

http://www.alta.org

They have some educational resources, but again classes will only get you so far. Don't get me wrong, this isn't rocket science, but until you have walked through a few thousand files you are a newb.

I have had my fingers on over 30,000 files at one point or another in the process, and like I said, I still see stuff all the time I have never seen before.

90% of the people I know in the title business started at or near the bottom, many not even knowing what title insurance is (was) and have worked their way up the food chain. Most (many) title companies and underwriters have attorneys on their staff or are owners. Some of them are side businesses for the attorneys, some are primary it varies alot of course. The big underwriters all have massive legal departments to handle pre-closing questions as well as post closing claims issues.

[Dmitriy@AUTOcouture]

Thank you very VERY much. I truly appreciate it.